USD/CAD spikes up to multi-month highs above 1.30 on robust PMI figures from US
- USD/CAD leaps to 1.3066 on USD strength.
- Activity in the service sector in the U.S. continues to expand.
- DXY extends higher above 94.
With its initial reaction to upbeat macroeconomic data releases from the United States, the USD/CAD broke above the 1.30 mark in the last hour to refresh its highest level since late March at 1.3066. As of writing, the pair was trading at 1.3030, adding 0.7%, or nearly 100 pips, on the day.
The report published by Markit Economics on Tuesday showed that the business activity in the service sector in the United States expanded at its best pace since April of 2015 with the PMI reading beating the market expectation of 55.7 with 56.8. Similarly, the ISM's non-manufacturing PMI data improved to 58.6 in May from 56.8 in April to surpass the market estimate of 57.5.
Boosted by the upbeat PMI figures, the US Dollar Index advanced to a session high of 94.30 and was last seen at 94.23, where it was up 0.22% on the day.
On the other hand, the data from Canada showed that the labor productivity decreased by 0.3% in the first quarter to fall short of the market consensus of +0.2%. Meanwhile, crude oil prices are not allowing the loonie to find demand and show some resilience against the USD either with the barrel of West Texas Intermediate remaining in the negative territory below the $65 mark.
Technical levels to consider
If the pair successfully closes the day above the 1.30 mark, it could extend its upside to 1.3120 (Mar. 19 high), 1.3200 (psychological level) and finally 1.3280 (Jun. 20, 2017, high). On the downside, 1.3000 (psychological level) aligns as the first support ahead of 1.2915 (Jun. 5 low) and 1.2815 (50-DMA).